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All This Talk Of The Apocalypse Is Making Me Bullish

The end of the world is in ten days, in case you haven’t heard. Party City is getting into the action with this “party like there’s no to-Maya” kit. Like a lot of people, I don’t believe in the impending apocalypse. I just want to make a little coin in the stock market before the end of the world of 15% tax rates on capital gains. As J.P. Morgan Asset Management investment strategist Michael Cembalest points out in a note to clients today, doomsday is a wonderful time to invest. That’s because the worst things tend to hit when no one’s looking, rather than when we’re prepared for disaster.

Cembalest wondered how stocks perform in the wake of horrific circumstances, defining 5 macro conditions as “bad fundamentals.” He created a portfolio that only invested in the S&P starting in 1948 when three or more bad conditions prevailed at the same time, or the “things are going to hell” scenario; another portfolio invested when none were true (the “Life is Fine”); and a third which invested when only one bad condition prevailed (the “Not So Bad”).

Wouldn’t you know it that the GTH portfolio generated better average returns one year after investment than the other two (see table below, click to enlarge it). “By the time fundamentals are indisputably poor, markets have often already priced them in,” writes Cembalest. Today, 3 of the conditions are true. Load up on stocks like there’s no “to-Maya.”

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